TRENTON, N.J. — A former partner at a broker-dealer firm with offices in Red Bank pleaded guilty Thursday to conspiring to commit securities fraud by trading on confidential information about a pending corporate merger, the U.S. Attorney’s Office for the District of New Jersey said.
Christopher Matthaei, 48, of Brielle, entered the plea Oct. 22 before U.S. District Judge Georgette Castner in federal court in Trenton. He pleaded guilty to a superseding information charging him with one count of conspiracy to commit securities fraud.
Matthaei worked as a partner and senior salesperson at the firm. According to prosecutors, one of his clients and close friends, Sean Wygovsky, was a trader at an asset management company based in Canada.
Through that job, Wygovsky learned that a special purpose acquisition company, identified in court documents as SPAC-1, was in confidential talks to merge with a target company.
Authorities have not identified the company but on that date, Tortoise Acquisition Corp. publicly announced its definitive merger agreement with Hyliion Inc., an electrified powertrain solutions company for Class 8 commercial vehicles.
Prosecutors said Wygovsky passed that nonpublic information to Matthaei on or about May 28, 2020, using an encrypted messaging platform. Relying on that tip and others, Matthaei repeatedly bought SPAC-1 securities between May 29 and June 18, 2020, according to the office.
SPAC-1 publicly announced its merger agreement on June 19, 2020. Matthaei began selling his position that same day, generating illegal profits of nearly $1.5 million, prosecutors said. As part of his plea agreement, Matthaei agreed that his total profits, including other relevant conduct, were between $2 million and $3.5 million.
Wygovsky pleaded guilty to securities fraud in connection with the scheme on or about May 25, 2023, according to the release.
The conspiracy charge carries a maximum penalty of five years in prison and a fine of up to $250,000, or twice the gross gain or loss from the offense, whichever is greatest. Sentencing is scheduled for Feb. 25, 2027.
U.S. Attorney Robert Frazer announced the plea. FBI special agents in Newark, under the direction of Special Agent in Charge Stefanie Roddy, investigated the case, with help from the U.S. Securities and Exchange Commission and the Criminal Prosecution Assistance Group at the Financial Industry Regulatory Authority.
Assistant U.S. Attorneys Jennifer S. Kozar, Rachelle M. Navarro and Casey S. Smith of the office’s Criminal Division in Newark are prosecuting the case. Matthaei is represented by Michael Critchley, Amy Luria and Armando Suarez.
This report is based on information from the U.S. Attorney’s Office for the District of New Jersey.
Source: U.S. Attorney’s Office press release
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